Brazil is an Ideal Breeding Ground for App Developers

When budding entrepreneurs have dreams of grandeur on creating the next big app, Silicon Valley might be the first destination on their minds. One place they may not have thought about is Brazil, which could be an ideal breeding ground for app developers.

“Targeting the young, growing Brazilian market may be the smartest decision an app publisher can make this year,” a Venture Beat article noted. “App installs have been growing at an impressive 30% year-over-year, easily the largest and fastest growth in the region. With the world’s sixth-largest population, Brazil’s smartphone growth has exploded in recent years — up 11% in 2019. But it may have only scratched the surface in terms of where the market could go. In 2019, Brazil had a smartphone penetration of only 45.6%, dwarfed in comparison to top countries like the U.K., Germany, and the U.S., which are around 80%.”

^MSBR Chart

^MSBR data by YCharts

In the meantime, for ETF investors looking to get exposure to Brazil, here are three funds to consider with varying strategies and market caps:

  1. iShares MSCI Brazil Capped ETF (NYSEArca: EWZ): EWZ seeks to track the investment results of the MSCI Brazil 25/50 Index, which consists of stocks traded primarily on B3 (the largest Brazilian exchange). The index is a free float-adjusted market capitalization-weighted index with a capping methodology applied to issuer weights so that no single issuer of a component exceeds 25% of the underlying index weight, and all issuers with weight above 5% do not cumulatively exceed 50% of the underlying index weight.
  2. WisdomTree Brazilian Real Strategy ETF (NYSEArca: BZF): BZF seeks to achieve total returns reflective of both money market rates in Brazil available to foreign investors and changes in value of the Brazilian real relative to the U.S. dollar. The fund normally invests at least 80% of its net assets, plus the amount of any borrowings for investment purposes, in investments whose combined performance is tied economically to Brazil. BZF generally will maintain a weighted average portfolio maturity of 90 days or less with respect to the money market securities in its portfolio.
  3. VanEck Vectors Brazil Small-Cap ETF (BRF): seeks to replicate as closely as possible, before fees and expenses, the price and yield performance of the MVIS® Brazil Small-Cap Index. The fund normally invests at least 80% of its total assets in securities that comprise the fund’s benchmark index. The index includes securities of Brazilian small-capitalization companies. A company is generally considered to be a Brazilian company if it is incorporated in Brazil or is incorporated outside of Brazil but has at least 50% of its revenues/related assets in Brazil.

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